Saudi Arabia’s Saad Group Head Accused of Operating One of the Largest Ponzi Schemes in History

A New York court has been told that Maan al Sanea, head of Saudi Arabia’s embattled Saad Group, operated one of the largest Ponzi schemes in history. The claim, denied by Mr. al Sanea, alleges he fraudulently borrowed billions of dollars from dozens of banks, increasing loan levels year-by-year.

What is a Ponzi Scheme?

A Ponzi scheme is a type of fraud where investors are paid out of illusory profits, which are actually fresh money injected into the business by new investors. This type of scheme is named after Charles Ponzi, who ran a similar scheme in the 1920s. The most famous example of a Ponzi scheme is the $68 billion fraud committed by US financier Bernard Madoff.

The Allegations Against Maan al Sanea

The allegations against Mr. al Sanea come amid a flurry of legal action in New York, with the al Gosaibi family claiming he perpetrated a $10 billion fraud on them. The al Gosaibis have also accused Mashreqbank of Dubai of aiding and abetting Mr. al Sanea’s conduct, claims rejected by the bank.

Evidence of Collusion

Lawyers for Ahman Hamad Al Gosaibi and Brothers claim to have found evidence of long-term collusion between Mr. al Sanea and Mashreq. Documents filed in court show an officer of Mashreq wrote to Mr. al Sanea in June 1999, expressing interest in starting a relationship with the group.

Foreign Exchange Transactions

The filings cast doubt on foreign exchange transactions between Mashreq and Al Gosaibi, alleging they were short-term loans rather than genuine transactions. The lawyers also accuse Mr. al Sanea of committing forgery with Mashreq’s knowledge.

Mashreq’s Response

Mashreq has denied the allegations, saying it acted in good faith in dealing with Al Gosaibi and saw no evidence of massive fraud or forgery within the company.

Counter-Allegations Against Al Gosaibi

In a separate legal move, Mr. al Sanea’s lawyers accused Al Gosaibi of “forum shopping” - bringing actions in multiple jurisdictions around the world. They also disputed the jurisdiction of the New York courts as the appropriate arenas for the dispute, arguing Saudi Arabia would be the best place to litigate.

Expert Opinion

Ian Edge, director of the Centre for Islamic and Middle Eastern Law at the University of London’s School of African and Oriental Studies, said Saudi Arabia is the most appropriate forum for settling the dispute.

In conclusion, the allegations against Maan al Sanea are serious and far-reaching. The court proceedings will likely be closely watched as they unfold, and it remains to be seen what evidence will ultimately be presented to support or refute the claims.